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SAMA RESOURCES INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30,
2017
AS OF NOVEMBER 6, 2017
TSX-V: SME
INDEX
SCOPE OF MD&A AND NOTICE TO INVESTORS
....................................................................
2 FORWARD LOOKING STATEMENTS
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2 HIGHLIGHTS
.............................................................................................................................
3 OVERALL PERFORMANCE
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4 MINERAL PROPERTY PORTFOLIO
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5 NICKEL MARKET ANALYSIS
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25 NATURAL GRAPHITE FLAKE PROJECTED MARKET SIZE
.................................................. 27 SELECTED
FINANCIAL INFORMATION
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32 TRANSACTIONS WITH RELATED PARTIES
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36 COMMITMENTS
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37 OFF-BALANCE SHEET ARRANGEMENTS
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37 OUTSTANDING SHARE DATA
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37 CONFLICTS OF INTEREST
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38 CRITICAL ACCOUNTING POLICIES AND ESTIMATES
........................................................ 38
ESTIMATES, JUDGMENTS AND ASSUMPTIONS
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39 RISKS AND UNCERTAINTIES
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39
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
2
SCOPE OF MD&A AND NOTICE TO INVESTORS
This management’s discussion and analysis of financial position
and results of operations ("MD&A"), is prepared as of November
6, 2017, and complements the unaudited interim condensed
consolidated financial statements of Sama Resources Inc. (the
“Company”) for the third quarter ended September 30, 2017 which are
compared to the third quarter ended September 30, 2016. These
unaudited interim condensed consolidated financial statements
include the parent company Sama Resources Inc. (“Sama”), its wholly
owned subsidiaries Sama Nickel Corporation (“Sama Nickel”) and Sama
Nickel Côte d’Ivoire SARL (“Sama CI”) subsequently referred as the
Sama Group, as well as SRG Graphite Inc. (“SRG”), and Sama
Resources Guinee SARL (“Sama Guinee”) owned at 43.93%, subsequently
referred as the SRG Group. SRG is a public company and its common
shares are listed on the TSX Venture Exchange (the “TSX-V”) under
the trading symbol “SRG.V”. The interim condensed consolidated
financial statements and related notes have been prepared in
accordance with IAS 34, Interim Financial Reporting. They do not
contain all the information required to be disclosed in annual
financial statements. Certain information and notes usually
provided in the annual financial statements have been omitted or
condensed when not deemed essential to the understanding of the
interim financial information of the Company. Therefore, this
MD&A should be read in conjunction with the information
contained in the annual audited consolidated financial statements
of the Company and the notes thereto for the year ended December
31, 2016. All financial information has been prepared in accordance
with International Financial Reporting Standards ("IFRS") and all
amounts are in Canadian dollars unless otherwise indicated. The
Company’s independent auditors have not conducted a review of the
interim condensed consolidated financial report in accordance with
the standards established by the Canadian Institute of Chartered
Accountants regarding the review of the interim financial report.
Management of the Company is responsible for the preparation and
presentation of the interim condensed and annual consolidated
financial statements and notes thereto, MD&A and other
information contained in this MD&A. Additionally, it is
management’s responsibility to ensure the Company complies with the
laws and regulations applicable to its activities. The unaudited
interim condensed consolidated financial statements and the
MD&A have been reviewed by the audit committee and approved by
the Company’s Board of Directors on November 6, 2017. These
documents and more information about the Company are available on
SEDAR at www.sedar.com.
FORWARD LOOKING STATEMENTS
Certain statements made in this MD&A are forward-looking
statements or information. The Company is hereby providing
cautionary statements identifying important factors that could
cause the Company's actual results to differ materially from those
projected in the forward-looking statements. Any statements that
express, or involve discussions as to, expectations, beliefs,
plans, objectives, assumptions or future events or performance
(often, but not always, through the use of words or phrases such as
"may", "is expected to", "anticipates", "estimates", "intends",
"plans", "projection", "could", "vision", "goals", "objective" and
"outlook") are not historical facts and may be forward-looking and
may involve estimates, assumptions and uncertainties which could
cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements. In making these
forward-looking statements, the Company has assumed that the
current market will continue and grow and that the risks listed
below will not adversely impact the business of the Company. By
their nature, forward-looking statements involve numerous
assumptions, inherent risks and uncertainties, both general and
specific, which contribute to the possibility that the predicted
outcomes may not occur or may be delayed. The risks, uncertainties
and other factors, many of which are beyond the control of the
Company that could influence actual results are summarized below
under the heading "Risks and Uncertainties". Further, unless
otherwise noted, any forward-looking statement speaks only as of
the date of this MD&A, and, except as required by applicable
law, the Company does not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for management to predict all such
factors and to assess in advance the impact of each such factor on
the business of the Company, or the extent to which any factor or
combination of factors may cause actual results to differ
materially from those contained in any forward-looking
statement.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
3
COMPANY OVERVIEW Sama is a Canadian-based mineral exploration
and development business with activities in Africa. The Company was
incorporated on July 11, 2006 under the Business Corporations Act
of British Columbia. On May 13, 2013, the Company continued its
jurisdiction of incorporation from British Columbia into the
federal jurisdiction of Canada under the Canada Business
Corporations Act. The Company’s common shares are listed on the TSX
Venture Exchange (the "TSX-V") under the trading symbol "SME.V".
The Company’s head office is located at #132 – 1320 Graham Blvd.,
Mont-Royal, Quebec, Canada, H3P 3C8.
HIGHLIGHTS
Sama Group On August 28, 2017 the Company announced that recent
tests conducted by CVMR Corporation (“CVMR”) on
Samapleu mineralized material returned recovery rates of 92% and
85% nickel and iron, respectively. The quality nickel produced will
be suitable for a wide range of end-use applications, including
rechargeable batteries, aerospace uses, metal injection molding for
automotive and medical instrumentation parts as well as feed
material for 3D additive manufacturing. Moreover, the premium
nickel and iron powders produced from the concentrate are expected
to improve with system optimization during the subsequent
campaign.
On October 11, 2017, the Company announced the appointment of
Raphael Beaudoin as metallurgist and Director of Operation of Sama
and SRG.
On October 23, 2017, the Company announced that it has entered
into a binding term sheet in view of forming a strategic
partnership with HPX TechCo Inc. (“HPX”), a private mineral
exploration company in which mining entrepreneur Robert Friedland
is a significant stakeholder, in order to develop its Côte d’Ivoire
Nickel-Copper and Cobalt project in Côte d’Ivoire, West-Africa. As
part of the Term Sheet, HPX would make a strategic investment in
Sama of up to C$12,250,000. HPX would also have the ability to
earn-into a joint venture with Sama to acquire a total of up to a
60% interest in Sama’s interest in the Côte d’Ivoire project,
including the Samapleu Project, by funding exploration expenses and
completing the feasibility study through total investments of
C$30,000,000.
In October 2017, a total of 50,000 warrants were exercised at a
price of $0.15 per share and 1,308,667 warrants at a price of $0.20
per share for total proceeds of $269,233.
SRG Group On July 19, 2017, the Company announced drilling
results which continue to expand the potential of the Company’s
Lola Graphite project.
On August 16, 2017, the Company announced a non-brokered private
placement with CORIS Capital SA (“CORIS”) of 7,500,000 units at a
price of $0.40 per Unit, for total gross proceeds of $3,000,000.
Each Unit will be comprised of one common share of the Company and
one-half of one non-transferable share purchase warrant. Each whole
warrant will entitle CORIS to purchase for a period of 24 months
from the date of closing, one additional common share of the
Company at an exercise price of $0.50 per warrant.
On August 22, 2017, the Company announced that recent laboratory
metallurgical tests conducted by ProGraphite
GmbH utilizing a simple flotation procedure yielded graphite
concentrates of up to 96% purity. Results, which were achieved
through a simple flotation and attrition continue to corroborate
the important potential of the Lola Graphite Project.
On August 31, 2017, the Company announced the closing of tranche
1 of the non-brokered private placement
announced on August 16, 2017 with CORIS. The Company has issued
a total of 5,250,000 units at a price of $0.40 per Unit for gross
proceeds of $2,100.000. The remaining $900,000 of the non-brokered
private placement will close following approval of documentation
filed with the TSX-V. Upon closure of the second tranche, CORIS
will own a 18% interest in the Company and will have the right to
assign two board members.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
4
On September 07, 2017, the Company announced results from
battery grade characterization tests with Dorfner ANZAPLAN Co.
(“ANZAPLAN”) in Germany for graphite concentrate from the Company’s
100%-owned Lola Graphite deposit. ANZAPLAN reported that bulk
density, tap density, morphology, chemical purity and specific
surface area of the spherical graphite product obtained from the
Lola Graphite deposit are similar to typical spherical graphite
products in the market. ANZAPLAN confirmed that the Lola Graphite
concentrate is well suited for producing the anode material used to
manufacture lithium-ion batteries. Results from the Lola Graphite
tests indicate a spherical graphite production yield of 46%
compared to typical yields of 30% to 40%.
On September 13, 2017, the Company announced assay results from
12 boreholes drilled at the Lola Graphite
deposit. Nine of the 12 intercepts returned grades above 10%
graphitic carbon, including 10.06% Cg over 48.0 meters combined
intercepts.
On September 13, 2017, the Company announced that it had
retained Venture Liquidity Providers Inc. to initiate a
market-making service to aid in maintaining an orderly trading
market for the common shares of the Company.
On September 27, 2017, the Company announced that it has engaged
Montreal-based Met-Chem, a division of DRA Americas Inc., to
undertake a Preliminary Economic Assessment for the Lola Graphite
Project.
On September 27, 2017, the Company retained the services of
Hybrid Financial Ltd. for strategic investor relations
initiatives. The initiatives will include marketing,
distribution and branding services for the Company with a specific
focus on elevating the Company’s profile via investment advisers in
Canada and United States.
On October 02, 2017, the Company announce that members of senior
management and directors rang the opening
bell on the Toronto Stock Exchange (TSX) the same day at 9:30 am
(EDT) to celebrate the stock’s noteworthy performance since it
commenced trading on the TSX Venture Exchange on January 16,
2017.
On October 25, 2017, SRG announced the closing of the second
tranche of the non-brokered private placement
with Coris Capital SA ("Coris"). The first tranche closed on
August 30, 2017 by issuing 5,250,000 units and the second tranche
closed on October 24, 2017, by the issuance of 2,250,000 units for
a total of 7,500,000 units at a price of $0.40 per unit, for total
gross proceeds of $3,000,000. Each unit comprises one common share
of SRG and one-half of one non-transferable share purchase warrant
of SRG. Each whole warrant will entitle Coris to purchase, for a
period of 24 months from the date of closing, one additional common
share of SRG at an exercise price of $0.50 per share.
OVERALL PERFORMANCE
During the third quarter of 2017, Sama Group maintained its
priorities on the Samapleu property located in Côte d’Ivoire. On
July 13, 2017, the Company started a 2,000 meters drilling program
at the Samapleu Main and Extension 1 areas. This drilling program
is designed at reducing drill spacing within the inferred mineral
resources to increase confidence level from inferred to indicated
categories (Figure 2). A total of 13 holes for 1,640 meters were
completed by September 30, essentially at the Extension 1 area.
Drilling results are pending. The Abidjan’s based consultant group
SIMPA continued its environmental work program with public
consultations on site. The CVMR group continued its metallurgical
test at their facilities and further improved the proposed
processing route with material returning recovery rates of 92% and
85% nickel and iron. Sama Groups also entered into a binding term
sheet in view of forming a strategic partnership with HPX TechCo
Inc. (“HPX”), a private mineral exploration company in which mining
entrepreneur Robert Friedland is a significant stakeholder. The
proposed strategic partnership is to intensify exploration works at
the Company’s Nickel-Copper and Cobalt properties in Côte d’Ivoire,
West-Africa. During the third quarter of 2017, SRG continued its
drilling activities at the Lola Graphite deposit by completing
4,402 meters of drilling as well as the environmental baseline
study according to the Guinean’s BGEEE guideline. Metallurgical
investigations also continued in Canada and in Germany. SRG engaged
Montreal-based Met-Chem, a division of DRA Americas Inc., to
undertake a Preliminary Economic Assessment for the Lola Graphite
Project which is expected to be completed by mid-2018.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
5
MINERAL PROPERTY PORTFOLIO
The exploration programs and technical disclosure for the
Company are designed by Marc-Antoine Audet, P.Geo, PhD, President
and Chief Executive Officer of SRG who is a ‘qualified person’
(“QP”), as defined by National Instrument 43-101, Standards for
Disclosure for Mineral Projects (“NI 43-101”).
Figure 1: Exploration permits in the Ivory Coast and in
Guinea
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
6
Figure 2: Proposed infill drilling program at the Samapleu Main
and Extension 1areas.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
7
SAMA GROUP MINERAL PROPERTIES Samapleu Property (PR123) On
January 15, 2009 (“Effective Date”), Sama Nickel entered into a
Syndicate Agreement (“SA”) with La Société pour le Développement
Minier de la Côte d’Ivoire (“SODEMI”), a parastatal organization,
whereby Sama Nickel has indicated a particular interest in the
exploration of an area covered by Permit No. 123 (“PR123”), held by
SODEMI, located in Côte d’Ivoire. PR123 encompasses approximately
446 square kilometers.
Upon execution of the SA, Sama Nickel became responsible to
finance exploration work programs on behalf of the SA during the
exploration phase of the project through completion of a Bankable
Feasibility Study (“BFS”). SODEMI will not contribute to work
conducted under the SA. On October 25, 2015, Sama Nickel and SODEMI
extended certain terms of PR123 resulting in an exploration license
extension to June 25, 2017. On June 9, 2017, before the exploration
license extension expired, Sama Nickel and SODEMI filed a request
for a Mining Permit (Permis d’Exploitation (PE)) for an area of 160
km2 within the Samapleu exploration license as well as a request
for an Exploration Permit (Permis de Recherche (PR)) for the
remaining area of the Samapleu PR123, located west of the PE. While
the authorities are studying the requests, Sama Nickel is allowed
to perform exploration and evaluation work on the Samapleu PR123
license. As of today, there is no indication that the Permits will
not be granted. However, a whole or partial impairment of the value
of the Samapleu Property will be required should Sama Nickel fail
to obtain the Permits. Upon completion of the BFS, the Advisory
Committee (“AC”), which consists of two Sama Nickel representatives
and two SODEMI representatives, will conclude on the feasibility of
the project. If the AC decides to proceed with the project, an
Exploitation Entity (“EE”) will be established whereby future
funding will be split between Sama Nickel and SODEMI at 66.7% and
33.3%, respectively. The EE will reimburse SODEMI for any costs
associated with previous exploration work conducted until January
15, 2009 up to a maximum of F CFA 834,999,457 (approximately
$1,888,071 as at June 30, 2017) and will reimburse Sama Nickel for
costs associated with exploration work conducted between the
Effective Date and the approval of the BFS subject to the approval
of the AC which represent a total amount of $19,033,183 as at
September 30, 2017. The ownership of the EE shall be allocated as
follows:
Sama Nickel 60% SODEMI 30% Côte d’Ivoire Government 10% 100%
If the AC decides not to proceed with the project, SODEMI may,
at its sole discretion, terminate the SA and SODEMI would become
the owner of all results of the exploration works and all studies
associated with infrastructures, for no financial consideration.
The Samapleu Property is subject to a 1% net smelter return
royalty.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
8
Figure 3: Sama Nickel & Sodemi applied on June 9, 2017 for a
160 km2 Mining Permit within the Samapleu PR123. The area west of
the proposed PE is subject to a new application for an Exploration
Permit (PR).
On June 8, 2017, Sama signed a Technology License Agreement
(“License”) with CVMR whereby CVMR authorizes Sama to use CVMR’s
patents and technology to operate nickel and iron powder
manufacturing plants in the Ivory Coast (the “Plants”), to be
built, commissioned and delivered on a turn-key basis by CVMR,
following a positive feasibility study. The Plants will be
dedicated to the production of metal powders used in a variety of
products and manufacturing processes, including: 3D printing
(additive manufacturing), aerospace and automotive parts
manufacturing, medical instruments, computer and electronic parts,
super alloys, sophisticated net shapes for use in the defense and
space industries, metal injection molding (MIM), anti-seize
lubricants, chemicals and catalysts, etc.
In consideration of the License, Sama has agreed to pay
$5,000,000 to CVMR either in cash or through the issuance of an
equivalent value of common shares of Sama within 90 days of the
granting of the mining license, subject to the TSX-V approval.
Share price will be based on the average closing price of those
shares on the TSX-V Exchange for each day during the three months
of trading prior to issuance. In addition, CVMR will receive a
royalty equal to 15% of the sale price of metal powders produced by
the Plants in excess of the London Metal Exchange price of the
elements contained in such powders.
Sama and CVMR will negotiate a project construction agreement
with respect to the Plants.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
9
Sama has also retained CVMR to perform a detailed technical
study to confirm the commercial viability of producing nickel and
iron powders from nickel-iron concentrate obtained from the
flotation of the mineralized material of the Samapleu deposits.
Sama applied on June 9, 2017 to the Department of Mines in Ivory
Coast to transform the current Samapleu Permis de Recherche No 123
(“PR123”) into a mining permit. Sama Group will continue with is
exploration efforts aiming at delineate massive sulphide reservoirs
that could be the source of high grade nickel (“Ni”) – copper
(“Cu”) - palladium (“Pb”) lenses intercepted in shallower boreholes
at the Samapleu deposits. The Table 1 has select highlights of
high-grade drill results at the Samapleu and Yepleu. Table 1:
Highlight table of high-grade drill intercepts previously
reported
Hole-ID From To Interval Ni Cu Pd Date of News Release m m m % %
gr/t
Samapleu Deposits SM44-428267 15.00 68.90 53.90 0.96 0.76 0.74
April 20, 2015
including 57.65 60.55 2.90 4.45 2.20 3.08 including 62.90 68.00
5.10 3.87 2.56 2.83
SM25-133537 30.00 63.00 33.00 0.38 0.31 0.63 April 20, 2015
including 32.45 36.65 4.20 1.13 1.03 1.75
SM44-683140 347.00 495.85 149.00 0.30 0.29 0.42 August 12, 2014
including 347.00 356.20 9.20 0.46 1.12 1.11
SM44-693140b 513.20 604.40 91.20 0.25 0.17 0.24 August 12, 2014
including 513.95 514.25 0.30 0.19 6.55 1.99 including 594.15 597.55
3.40 1.12 0.50 1.61
SM44-494350b 11.00 64.00 53.00 0.52 0.50 0.31 February 16, 2012
including 29.20 34.80 5.60 1.91 1.71 0.94
SM44-450250b 33.50 92.90 59.40 0.89 0.86 0.81 June 20, 2011
including 85.25 91.90 6.65 3.80 2.92 3.09
SM44-492354 10.00 61.00 51.00 0.72 0.61 0.45 January 10, 2011
including 36.00 46.00 10.00 1.76 1.30 1.00 including 24.00 29.00
5.00 1.32 1.18 0.75
SM44-450250 13.50 102.80 89.30 0.66 0.64 0.58 May 31, 2010
including 86.60 101.60 17.00 1.99 1.96 1.49
SM25-112519 22.00 144.00 122.00 0.44 0.32 0.94 including 84.90
95.90 11.00 1.89 0.78 2.84
SM24-661614 67.30 244.00 176.70 0.26 0.20 0.49 June 26, 2010
including 162.00 170.60 8.60 1.02 0.95 1.51
Yepleu YE34-418407a 26.15 48.00 21.85 0.42 0.23 0.12 January 14,
2014
including 4.40 1.13 0.14 0.29
Samapleu Nickel-Copper Type Mineralization Since 2009, Sama
Group regional exploration work highlights the prospective
potential of the entire PR123 area. In addition to the Samapleu
Main deposit and the nickel-cobalt rich laterite Sipilou South
deposit, there were several mineralized sectors that have been
identified within the PR123 area, including Sama Group discovered
Samapleu Extension 1 deposit, the Yorodougou occurrence and the
Yepleu occurrence as well as numerous massive chromite showings,
all part of the newly discovered Yacouba Layered Complex. The
Samapleu and Yepleu deposits mineralization and geological
characteristics are typical of a layered Pipe like Intrusion or
conduit‐hosted nickel deposits. These rare types of intrusions host
the world’s largest nickel‐copper deposits such as: Jinchuan (515
million tonnes (“Mt”) at 1.06% nickel), Voisey Bay (137Mt at 1.68%
nickel), Kabanga (52Mt at 2.65% nickel), Eagle (4.5Mt at 3.33%
nickel), Eagle Nest (20Mt at 1.68% nickel), Kalatongke (24Mt at
0.68% nickel), and N’komati (2.8Mt at 2.08% nickel). The Yacouba’s
mafic and ultramafic hosts were intruded within the older gneissic
assemblage of the West Africa’s craton. It is interesting to note
that the age for the Yacouba Layered Complex is almost the same as
the large and mineral rich South-African Bushveld complex (host of
the Ivanhoe’s large Flatreef palladium-Nickel deposit and numerous
other chromite+ Platinoid Group Elements deposits as well as the
nearby N’Komati nickel-copper-palladium deposit).
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
10
Samapleu and Yepleu deposits are typical magmatic Nickel‐Copper‐
Plantinum group elements (“PGE”) deposits with common metallurgical
characteristics. Nickel and copper mineralization (pentlandite,
chalcopyrite, combined with pyrrhotite, rarely pyrite) correspond
to sulphide disseminations ranging from trace to 40% and
semi-massive to massive (40% to 100% sulphides) sulphide rich
lenses often spatially associated with highly breccia texture in
pyroxenites mostly. The semi-massive and massive sulfide veins
display a number of characteristics suggesting that they are part
of a larger mineralizing system:
1. Extreme variations in nickel:copper ratio indicative of
fractionation of sulfides.
2. Association with varied textured and brecciated facies.
3. Presence of an unusual texture called loop texture. Large
pyrrhotite crystals (5 centimeters in diameter) are rimmed by
smaller chalcopyrite and pentlandite that define a loop that
encloses the pyrrhotite. These textures are seen at Norilsk and
Voiseys Bay nickel-copper-PGE deposits.
4. Abundant sulfide inclusions (globules) within pyroxene
crystal indicating sulfur (S) saturation took place before pyroxene
crystallization (at depth).
It is to be noted that the mineralization is open at depth at
the Samapleu deposits and remains mostly untested below 200 m from
the surface. The mineralization is open at depth but also along
strike at the Samapleu Extension 1. Sama Group regional compilation
and exploration work highlights the very highly prospective
potential of the whole area surrounding these known intersections.
Sama Group also completed a 13,500 line/km airborne magnetometer
and radiometric survey over the Samapleu Property and a portion of
the Lola Property; 3,900 line/km of airborne helicopter time domain
electromagnetic and magnetic survey (“HTEM”) at the Samapleu
Property; and 60 line/km of InfiniTEM ground geophysical survey
over Samapleu Main and Extension 1 deposits and the Yepleu Complex.
More than 20 priority targets as potential for additional
nickel-copper-platinum group elements mineralization have been
outlined. Strong conductors were identified at the Samapleu Main
and Samapleu Extension 1 deposits as well as along a corridor of
more than 25 km oriented north-east. Sama Group drilling programs
started in March 2010, by contracting Orex Africa SARL of Abidjan,
Côte d’Ivoire, for the drilling requirement. Subsequently, during
the course of 2010, Orex Africa SARL changed their name to Global
Exploration Services SARL (“GES”). A track mounted YDX-3L wire line
drill rig type was used throughout. A total of 211 boreholes for
22,795 m were drilled using these contractors. In 2013, Sama Group
purchased their first Coreteck track mounted CSD1300G wire line
drill rig. A second drill rig was purchased in 2014. Since then,
all drilling activities were performed internally. Table 2
summarizes the drilling programs from July 2010 to September 2016.
Table 2: Drilling programs from July 2010 to June 30, 2017
Area Contractor drilling Sama Drilling Total lengths
(m)
Borehole m Borehole M
Main Deposit 71 10,630 5 1,590 12,220
Samapleu Extension 1 44 7,044 20 4,513 11,557
Yepleu 24 4,868 4,868
Sipilou Sud Laterite 80 2,688 2,688
Yorodougou 4 735 2 291 1,026
Bounta North chromite 6 659 659
Santa 5 952 952
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
11
Area Contractor drilling Sama Drilling Total lengths
(m)
Grata 2 767 767
Regional 12 1,698 1,698
Total 2010-2015 211 22,795 64 12,814 36,435
Near surface exploration at the Samapleu Project (< 150 m
deep) returned centrally located massive sulphide vein stock works
encased in a thick halo of disseminated sulphide. Nickel and copper
tenors of up to 4-5% and 6-8%, respectively, were obtained in
massive sulphide material. Eleven boreholes were drilled testing
the Tri-dimensional Conductivity Depth Imaging (“CDI”) targets. All
high priority CDI targets could be related to the presence of
mineralization in various concentrations including semi-massive to
massive lenses within what Sama believes to be the mineralized
trend extending at depth and also laterally. Hole SM44-693140
intercepted a continuous mineralized zone of 149 m grading 0.30%
nickel 0.29% copper, 0.04% cobalt, 0.42 grams per tonne (“gpt”)
palladium. The interval started 347 m from surface and included
several semi-massive high grade sulphide lenses, including a 30m
combined interval grading 0.50% nickel, 0.89% copper and 0.83 gpt
palladium within intercepts of up to 2.06% nickel and 1.54% nickel.
Hole SM44-683140B intercepted a total of 91m of mineralized
pyroxenite with several semi-massive to massive sulphide stringers
and lenses before being terminated within the mineralization due to
maximum depth capability of our drill rig. Tenors of up to 6.55%
copper and an interval of 3.4 m grading 1.12% nickel, 0.50% copper
and 1.61 gpt palladium were intercepted at the bottom of the hole
which suggest that the mineralization continued at depth. Hole
SM44-428267 intersected 54 m of mineralized pyroxenite, grading
0.96% nickel, 0.76% copper and 0.74 gpt palladium, including a
combined 8.0 m of massive sulphide grading 4.08% nickel, 2.43%
copper & 2.92 gpt palladium at the Samapleu Main deposit.
Drilling results confirm the pipe-like intrusion as a 1.6 km long,
large fold linking the Samapleu Main and the Extension 1 deposits
and solidifies the geological model at depth. Down hole
electromagnetic surveys (“DHTEM”) on the SM34-564718 at the
Samapleu Main deposit and the recently drilled 342 m long
GR72-787708 at the Grata property were completed on December 19,
2016 by Abitibi Geophysics of Val D’Or, Canada. Sama Group
exploration objective is to delineate massive sulphide reservoirs
that could be the source of high grade nickel, copper, palladium
lenses intercepted in shallower drill holes at the Samapleu
deposits. The DHTEM at SM34-564718 suggests the presence of two
high intensity conductors. The DHTEM at GR72-787708 suggests the
presence of a high intensity off-hole conductor just below the
drill hole. Samapleu Extension 1 Deposit The Samapleu Extension 1
deposit was discovered by Sama Group in June 2010 and is located
1.3 km to the north of the Samapleu Main deposit. The surface
expression of the ultramafic-mafic geological host of the Samapleu
Extension 1 deposit and the newly discovered SM34 Sector is
approximately 2,000 m long by 50 m to 200 m wide and is still open
in both directions. The ultramafic-mafic host is oriented
northeast-southwest. Sixty-four boreholes for 11,557 m were drilled
since 2010 at the Samapleu Extension 1 deposit. Borehole
SM24-112519 returned 122.0 m grading 0.44% nickel and 0.32% copper
and 0.94 gpt of palladium, including 11.0 m @ 1.88% nickel, 0.78%
copper and 2.84 gpt palladium; borehole SM25-080542 returned 38.5 m
at 0.46% nickel and 0.50% copper and 0.85 gpt palladium and 0.12
gpt platinum; and borehole SM25-039587 returned 129.2 m at 0.26%
nickel and 0.17% copper, including 0.41 gpt palladium and 0.06 gpt
platinum.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
12
Yepleu Occurrence On June 6, 2013, Sama Group announced the
discovery of mineralized surface outcrops grading up to 1.39%
nickel and 2.26% copper sulphide (tested using a hand-held Niton
XRF analyzer) located 18 km southwest of the Samapleu nickel-copper
Deposit. The discovery, named Yepleu, shows outcrops with up to 25%
disseminated sulphide mineralization in mafic and ultramafic rocks
and strong mineralization seen at surface on several other outcrops
along a NW-SE strike length of 1.7 km, with some of them showing
continuous mineralized horizon of up to 25 m strike length. The
sector corresponds to a strong HTEM chargeability anomaly that
covers an area of 6 km by 4 km and appears to be open to the west,
southwest and south.
The disseminated mineralization is typically characterised by
fine isolated grains to large granular aggregates of nickel, copper
and iron sulphides. Sulphide phases observed so far include
pyrrhotite, chalcopyrite, pentlandite and minor pyrite. Pentlandite
occurs as inclusions in pyrrhotite. Disseminated sulphide occurs as
fine grains of 0.5 to 1 millimetre in diameter, showing a high
ratio of pyrrhotite versus chalcopyrite. Sulphide veinlets and fine
filaments are also present. Composite grains of sulphide material
are dominant, forming sulphide masses of odd shapes ranging from a
few millimetres up to several centimetres in any one dimension. The
semi-massive mineralization lenses show between 30% to 70% sulphide
minerals. Hole YE40-438348 (614 m deep) drilled in November 2015
(Figures 5 & 6), aimed at testing the geophysical anomaly
interpreted from the 2013 HTEM. As expected, the borehole
intercepted a sub-horizontal sequence of 366 m thick of alternating
diorite/anorthosite and mafic units, part of the Yacouba layered
complex, intruding the Archean gneissic host rock and named the
Upper Sequence. A mineralized horizon of 6 m of nickel-copper
mineralization, ranging from disseminated to semi-massive sulfides
material is located between 360.65 m and 367.30 m, marking the
bottom contact of the Upper Sequence. Below 366 m, another layered
sequence is present showing a package of diorite/anorthosite
together with pyroxenite also intruding the gneissic host rock,
named as the Lower Sequence. The borehole was terminated at 614 m
for a technical reason, without reaching the targeted depth for the
HTEM anomaly. The disseminated and semi-massive sulphide
mineralization of borehole YE40-438348 is characterised by
aggregates of nickel, copper and iron sulphides, named pentlandite,
chalcopyrite and pyrrhotite, respectively. Pentlandite occurs
together with pyrrhotite, while the chalcopyrite, being the third
mineral of global abundance appears either mixed with the
pentlandite or as late sulfide centimetric veins crosscutting the
pentlandite-pyrrhotite material. Contacts between the semi-massive
sulphide material and the surrounding quartzo-diorite with
disseminated sulphides are irregular and sharp indicating that the
semi-massive sulphide material has intruded the pyroxenite host
originating from a source that is yet to be discovered. Preliminary
results using a hand held Niton portable XRF analyser returned an
interval of 6.65 m grading 0.30% nickel and 0.26% copper, including
0.55 m at 0.90% nickel and 0.80% copper. This mineralisation is
identical in nature to the mineralisation observed near the surface
in all the other boreholes drilled in 2014 at the Yepleu prospect.
A subset of the 2013 HTEM survey was re-interpreted by the Danish
geophysical group Aarhus Geophysics using the Electromagnetic
inversion methodology in order to validate Sama Group
interpretation. Aarhus’ inversion model confirmed the presence of a
conductor and also that the area in the vicinity of the borehole
YE40-438348 is the most conductive in the Yepleu area. Sama Group
is planning to perform a DHTEM in YE40-438348 in order to acquire
more precision on the target at depth prior of executing additional
boreholes, there is no execution date set yet for the DHTEM.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
13
Mineral Resource On December 22, 2015, Sama Group filed a
revised 43-101 compliant mineral resource estimate on the Samapleu
Property. The revised mineral resource estimate includes an
indicated mineral resource of 14.1 Mt grading 0.24% nickel and
0.20% copper and containing 74.5 Mlb of nickel and 61.2 Mlb of
copper, together with an inferred mineral resource of 26.5 Mt
grading 0.24% nickel and 0.18% copper and containing 134 Mlb of
nickel and 107.2 Mlb of copper (Table 3). Table 3: Samapleu Project
Mineral Resources at 0.10% nickel cut-off grade, December 2015.
Classification Tonnes Contained
Nickel Contained
Copper Nickel
% Copper
% Cobalt
% Platinum
gpt Palladium
gpt Gold gpt
Rhodium gpt
(,000) t (,000) Lbs (,000) Lbs
Indicated 14,159
74,500
61,200
0.24
0.20
0.02
0.11
0.29
0.03
0.01
Inferred 26,480
134,000
107,200
0.24
0.18
0.01
0.09
0.31
0.03
0.01
During the six-month period ended June 30, 2017, an amount of
$841,915 was capitalized on the Samapleu Property, resulting in
total deferred exploration and evaluation expenditures of
$18,815,176. Estimated expenditures: The current estimate for
expenditures on the Samapleu Property (both corporate and
capitalized expenditures) for the next year is approximately
$860,000. The expenditure estimate is contingent upon obtaining
additional financing. The proceed will be used for additional
geophysical surveys, deep drilling and preparation for a technical
report. Worofla Property (PR 301) On November 7, 2012, Sama CI
obtained Permit No. 301 (“PR301”) which initially covered 400
square kilometers of property in Côte d’Ivoire. On October 13,
2015, Sama CI applied for the renewal of Permit No. 301. Upon
renewal, the Worofla Property will be reduced to 300 square
kilometers and Sama CI will have to complete an exploration program
of F CFA 390,590,000 ($877,987 as at September 30, 2017) by October
13, 2018. As of today, there is no indication that the Permit will
not be renewed. However, a whole or partial impairment of the value
of the Worofla Property will be required should Sama CI not reach
an agreement to renew the Permit. The Worofla Property is 100%
owned by Sama CI and is located 130 kilometers’ northeast of the
Samapleu Property. The Worofla Property was acquired based on its
nickel-copper exploration potential. During the nine-month period
ended September 30, 2017, an amount of $762 was capitalized on the
Worofla Property, resulting in total deferred exploration and
evaluation expenditures of $11,629.
Estimated expenditures: The current estimate for expenditures on
the Worofla Property (both corporate and capitalized expenditures)
for the next year is approximately $20,000. The Worofla Property is
on hold until receiving the final renewal document.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
14
Zérégouiné Property (PR 300) On December 19, 2012, Sama CI
obtained Permit No. 300 (“PR300”) which covers 394 square
kilometers of property in Côte d’Ivoire, West Africa. On July 11,
2017, the Permit was renewed for three years and as per
legislation, the surface area was reduced to 290 square kilometers.
This reduction in the surface area did not required an impairment
of capitalized E&E assets since Sama CI did not ceased area
were exploration and evaluation expenditures were done. In
accordance with PR300, Sama CI must complete an exploration program
of F CFA 614,000,000 ($1,380,178 as at September 30, 2017) by
December 19, 2018. The Zérégouiné Property is 100% owned by Sama CI
and is adjacent to the Samapleu Property.
The Zérégouiné Property has been partially explored with surface
mapping and geophysical surveys. The regional geological mapping
and the HTEM survey have identified that the geological host of the
newly discovered Yepleu nickel-copper-palladium mineralization
extends to an area as vast as 6 km x 4 km. The Zérégouiné Property
newly found prospects is outlined by a 6.5 km long strong
electromagnetic anomaly with numerous surface gossans and
mineralized grab samples including the 8.4%Cu (Niton XRF analyzer).
Borehole ZE16-233527, drilled down to a depth of 350 m, aimed at
testing the presence of mineralized mafic to ultramafic members of
the Yacouba complex responsible for the 6.5 kilometer long
electro-magnetic anomaly outlined by the 2013 airborne survey. The
borehole successfully intersected 210 m of prospective mafic member
showing mineralization from disseminated to up to 20% sulphide.
Downhole geophysical surveys together with additional drilling is
needed to fully evaluate the prospect. During the nine-month period
ended September 30, 2017, an amount of $65,556 was capitalized at
the Zérégouiné Property, resulting in total deferred exploration
and evaluation expenditures of $1,227,427. Estimated expenditures:
The current estimate for expenditures on the Zérégouiné Property
(both corporate and capitalized expenditures) for the next year is
approximately $480,000. The expenditure estimate is contingent upon
obtaining additional financing. The proceed will be used for
additional geophysical surveys, deep drilling and preparation for a
technical report. Grata property (PR 604) On December 9, 2015, Sama
CI obtained Permit No. 604 (“PR604”) which covers 80 square
kilometers of property in Côte d’Ivoire. In accordance with PR604,
Sama CI must complete an exploration program of F CFA 663,000,000
(approximately $1,490,323 as at September 30, 2017) by December 9,
2019. The Grata Property is 100% owned by Sama CI and is located
adjacent to the north-eastern boundary of the Samapleu Property.
The property is located adjacent to the north-eastern boundary of
the Samapleu exploration permit (PR 123). Sama believes that
ultramafic sequences of the recently outlined large Yacouba Layered
Complex which hosts the Samapleu Nickel-Copper-Palladium deposits,
are extending within the Grata Permit and as such represent a prime
target for nickel-copper-palladium mineralization. The borehole
GR72-787708 has been terminated at 342m and intersected the typical
Yacouba complex sequence including fractured pyroxenite and gabbro
with sulphide mineralization as fractures filling between 180 and
187m. During the nine-month period ended September 30, 2017, an
amount of $60,734 was capitalized at the Grata Property, resulting
in total deferred exploration and evaluation expenditures of
$155,697. Estimated expenditures: The current estimate for
expenditures on the Grata Property (both corporate and capitalized
expenditures) for the next year is approximately $170,000. The
expenditure estimate is contingent upon obtaining additional
financing. The proceed will be used for additional geophysical
surveys and additional drilling.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
15
Figure 4: Samapleu, Zérégouiné and Grata Exploration Permits
showing prospective sectors together with the geology related to
the Yacouba UM layered complex.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
16
Figure 5: Surface geology and deep target at Yepleu/Zérégouiné
(PR 123 - PR 300), cross-section A-A’ shown at figure 6.
A
A’
PR 123
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
17
Figure 6: Cross-section at Yepleu showing hole YE40-436348
terminated short of the target for a technical reason. A
mineralised horizon of 6.65 m grading 0.30% nickel and 0.26%
copper, including 0.55 m at 0.90% nickel and 0.80% copper was
intercepted at the interface between two-layer assemblages.
Sipilou South Nickel-Cobalt Laterite Mineralization Sama Group
has completed 80 boreholes for a total of 2,663 m at the portion of
the Sipilou South laterite deposit that falls within PR123.
Drilling has been performed on 200 m x 200 m spacing. The Sipilou
South nickel-cobalt laterite deposit is a typical example of nickel
and cobalt rich laterites formed in a seasonally wet tropical
climate on weathered and partially serpentinized peridotite. The
nickel in such deposits is derived from altered olivine, pyroxene
and serpentine that constitute the bulk of tectonically emplaced
ultramafic oceanic crust and upper mantle rocks. Due to its
location in a tropical environment, the Sipilou South nickel-cobalt
laterite deposit is defined as a ‘wet’ laterite as opposed to
laterites and palaeo-laterites found in arid and temperate
climates. SRG GROUP MINERAL PROPERTY Lola Graphite Property (Permit
de Recherche, PR 4543) Sama Guinee owns 100% in four licenses
(Permit de Recherche, PR 4543) to explore a combined 187 square
kilometers of property near the town of Lola in eastern Guinea. The
occurrence is within 50 km from the border with Guinea and located
3.5 km west of the town of Lola (Figure 1). The property is
centered on UTM WGS 84 zone 29N latitude 7° 48’ 00’’ (UTM 863,000
N) and longitude 8° 32’ 00’ (UTM 551,000E). The area includes the
communities of Lola and several smaller villages. An Exploration
license gives the applicant the right to explore for minerals a
certain time period as prescribed by the Mining law and regulation.
In Guinea, the land is federal and as such application to the
government, through the Mine and Energy Department, is required to
obtain an Exploration license. Pursuant to Sama Guinee’s request in
2012, the Republic of Guinea awarded Sama Guinee, through the
Arrété No A2013/4543/MMG/SGG dated September 2, 2013, the Lola
Graphite Exploration licenses for a first period of three years
renewable for two additional periods of two years each. There are
no environmental liabilities associated with the licenses and there
are no surface right agreements in place or being negotiated
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
18
Sama Guinee has agreed to complete an exploration program of GNF
9,361,376,000 (approximately $1,302,030 as at September 30, 2017)
by August 29, 2018. In July 2017, Sama Guinee applied for two
Reconnaissance licenses located north and south of the PR4543
(Figure 1). these two reconnaissance licenses have a validity of 6
months and will give Sama Guinea the opportunity to quickly explore
for additional graphite mineralization at surface along both sides
of the general strike of the Lola deposit. A Reconnaissance license
gives the applicant the right to quickly investigate the potential
for minerals for only six months. Following the six months period,
then the Company have the opportunity to apply for additional
Exploration licenses as prescribed by the Mining law and
regulation
Figure 1: Exploration and Reconnaissance permits in Guinea.
Exploration Update The Lola Graphite deposit is 8.7 kilometers long
with an average width of 370, and up to 1,000 meters wide (Figure
2). The first 20 meters or so of the deposit is well weathered
(lateralized), allows freeing graphite flakes from the silicate
gangue and allowing for an easy grinding with optimal recovery of
all large and jumbo flakes. The graphite mineralization continues
at depth within the non-weathered sheared gneiss. The graphite
mineralization is well exposed at surface on its entire strike
length with sample grades ranging from trace to up to 20% of
graphitic carbon (“Cg”) and often seen in higher concentration
agglomerates.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
19
A 4,800m drilling program is ongoing. The drilling program
started on March 07 with 4,404 m completed by September 30, 2017.
It is anticipated that drilling will continued until December 2017.
The Table 1 is showing few drilling results as of October 10, 2017.
The current drilling is aiming at testing the weathered portion of
the deposit from surface to approximately 20 m deep, quite often
deeper, with a few meters drilled within the fresh rock. The
thickness of the weathering profile is variable and extend down to
50m in many locations. It is expected that the 2017 drilling
program will cover approximately 16% of the entire surface area of
the deposit (Figure 2). Figures 3 and 4 are showing geological
cross-sections with Cg% results from drill holes within the
weathered profile at the Lola Graphite deposit. Three metallurgical
tests were performed at Activation Laboratory (Actlab), Ontario,
Canada in 2014, 2015 and 2016. In 2014, the first test was
performed on two of Lola’s most prominent mineralized facies, the
oxide material and the underlying non-oxide material (below 20
meters) while tests performed in 2015 and 2016 focused exclusively
on the oxide material. Laboratory work and analysis conducted by
ProGraphite since April 2017 on the Lola Graphite concentrate
returned excellent results indicating that graphite from the Lola
deposit is suitable for a very wide range of graphite applications,
including the important traditional markets like refractories,
crucibles, friction products, carbon brushes and sealing.
Additionally, the combination of very favorable ash composition,
high crystallinity, high oxidation resistance and excellent
purification behavior makes the graphite very valuable for
demanding new tech applications, including energy applications and
particularly with regard to spherical graphite for Lithium Ion
Batteries. ProGraphite Main Observations: The high proportion of
large flakes of the concentrate is remarkable. Only very few flake
graphite deposits have
such a high flake yield. This is a major advantage for the Lola
deposit, as the large flakes trade at significantly higher
prices.
The concentrate was screened to get particle size distribution
information with very favorable results: very coarse material, 2/3
of the graphite is large flake (+80 mesh), and 1/3 is “jumbo” flake
material (+50 mesh).
Compared to -100 mesh graphite of the same carbon grade, the
market price for +50 mesh material is more than
double, which makes the Lola deposit much more valuable. Main
elemental impurities are Si, Al and Fe, which is typical for flake
graphite. Impurities known to cause trouble
in various applications, such like S or heavy metals are
naturally on very low levels in the Lola graphite concentrate.
Key advantages of Lola graphite are the favorable ash
composition and the comparably low efforts required to attain high
carbon grades.
The graphite is of very high crystallinity, which means that the
graphite crystals are almost perfect, making this
graphite suitable for highly demanding applications like Lithium
Ion batteries or synthetic diamonds. Purification tests verified
that the graphite could easily be upgraded with standard processes
to levels above
99.5%; with most elements, already under the limits for battery
application. The purification performed was “mild” compared to the
“harsh” purification usually applied for Lithium-Ion battery grade,
thereby attesting again to the likelihood that the material will be
very suitable for such an application.
The volatiles are low, oxidation resistance is very high and the
specific surface area is in the normal range. The graphite from the
Lola deposit has a high bulk density (>700 g/l), typical Chinese
graphite has bulk densities
of 450-550 g/l for +80 mesh. The Table 2 is showing the
composition of graphite concentrate produce at ProGraphite in
August 2017
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
20
Table 1: Selected mineralized intervals at the Lola Graphite
Deposit. Intervals were defined using 1.0% Cg cut-off grades
(“cog”).
*
1 3% Cg cut-off grade (average grade of combined intervals).
*210% Cg cut-off grade (average grade of combined
intervals).
True thickness perpendicular to foliation is 67% of the drilled
thickness
Table 2: ProGraphite Metallurgical tests results. Subdivision of
the jumbo flakes into jumbo and super-jumbo sizes, August 2017.
HOLE-ID FROM LENGTH CG HOLE-ID FROM LENGTH CGm m % m m %
LL45-028438 0.00 26.50 5.09 LL36-119389 0.00 27.30 2.58including
*1 10.50 8.00 LL36-143397 0.00 21.00 2.77including *2 3.00 10.90
LL36-262441 0.00 55.50 8.92
LL45-052446 0.00 34.50 3.16 including *1 48.00 10.06including *1
4.50 10.70 including *2 22.50 15.15including *2 1.50 17.10
LL36-289450 0.00 46.10 6.80
LL45-070451 0.00 39.00 3.34 including *2 7.50 11.83including *1
9.00 6.20 LL36-313459 0.00 40.00 4.89
LL45-011373 3.00 31.00 5.76 including *1 21.00 7.75including *1
14.67 9.80 including *2 7.00 11.84including *2 5.00 16.32
LL36-337469 0.00 12.00 1.36
LL45-094198 0.00 33.00 4.30 LL36-239433 0.00 36.00 6.69including
*1 9.50 9.00 including *1 21.50 10.27including *2 3.50 12.41
including *2 11.50 14.95
LL45-112206 0.00 34.50 5.36 LL36-217425 0.00 36.30 5.84including
*1 21.75 7.60 including *1 16.80 10.24including *2 1.00 10.90
including *2 7.80 17.41including *2 1.00 18.50 LL36-191413 0.00
37.40 4.32
LL45-131212 0.00 22.70 4.56 including *2 1.50 10.10including *1
9.00 6.60 LL36-167405 1.50 24.00 3.51
LL45-148219 0.00 15.00 5.33 including *2 2.00 12.60including *1
9.00 7.50 LL36-205528 4.50 30.50 5.72
LL44-768470 23.00 13.00 14.22 including *2 5.00 12.12including
*1 4.50 36.97 LL36-228537 0.00 45.00 5.70
including *2 9.00 12.28
Flake size mm Proportion
% %Cg %Ash
+ 45 Mesh (Jumbo) >0.35 46.4 96.0 3.9 + 80 Mesh (Large)
>0.18 33.5 95.0 4.8 + 100 Mesh (Medium) >0.15 15.3 94.3 5.7 -
100 Mesh (Fine)
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
21
In 2013, SRG supported M. Sékou Oumar Sow, a Guinean geological
student at the University of Franche Conté, France, with his
under-graduate study. The study aimed at the mineralogical and
petrological characterisations of the mineralisation as well as the
host rock. The study was under the supervision of Professor
Christian Picard. Since Sow’s study, several investigations have
been completed at the University Grenoble-Alpes by Professor Picard
to further clarify the Mineralogical characteristics of the
graphite mineralization with attempt at dating the age of the
graphite mineralization. In summary, the graphitic mineralization
is hosted within a quartzo-feldspath-biotite-sillimanite rich
paragneiss with zircon, monazite and rutile as accessory minerals.
Graphite mineralization is present as natural flakes of 0.25 to 1
mm in size. Graphite flakes appears to be cogenetic with biotite
and sillimanite. Pyrite and minor chacopyrite are also present in
the fresh rock but are absent in the weathered material. The
Environmental Baseline Study (“EBS”) was launched March 10, 2017.
The Ivorian group “SIMPA” has been contracted to complete the EBS
and the subsequent Impact Study. The EBS is progressing well with
approximately 60% completed. During the nine-month period ended
September 30, 2017, the Company capitalized $1,062,550 at the Lola
Graphite Property. Estimated expenditures The current estimate for
expenditures on the Lola Graphite Property (both corporate and
capitalized expenditures) for the next year is approximately
$1,100,000. The proceeds will be use for the following work: To
complete the current 4,800m drilling program with an additional
1,500m to be drilled by December 2017. To continue metallurgical
test works to refine the flotation flowsheet To complete the
Environmental Baseline Study. To complete the PEA by end of
December 2017 To launch the environmental impact study in Q1 of
2018 To complete the Feasibility study by mid-2018 Collect
representative bulk samples for further analysis and to provide
concentrate samples to potential clients
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
22
Figure 2: Lola Graphite deposit showing the 2017 drilling
program with completed holes as September 30, 2017.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
23
Figure 3: Cross section 3500N showing Cg% for the weathered
profile at the Lola Graphite (see Figure 2 for locating
section)
Figure 4: Cross section 5800N showing Cg% for the weathered
profile at the Lola Graphite (see Figure 2 for locating
section)
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
24
Figure 5: Lola Graphite deposit showing the Coretech drilling
rig.
Figure 6: Core logging and sampling at the Lola Graphite
project.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
25
Figure 7: Comparison of Flake Size Distributions for Lola
Graphite and other Selected Published Sources
NICKEL MARKET ANALYSIS Since 2012, mining and metals markets
were affected by the downturn of the world economic due to a low
recovery of the global economy and the overcapacity in many
markets. As a result, mining companies had to scale down their
investment budgets. Markets for nickel and copper were no exception
and were severely affected. Figure 8 reported values of nickel and
copper from May 2012 to May 2017 (source: Kitco.com).
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
26
Figure 8: Nickel and Copper values from May 2012 to May
2017.
Rare were markets where prices have rebounded permanently during
the last five years. Following attempts to rebound in the first
half of 2014, nickel prices resumed its downward trend until
mid-2016. During this period, the surplus of supply over demand
resulted in a significant increase in stocks; 460,000 tons in
August 2016, compared to less than 100,000 tons in May 2012 (see
Figure 9). There was a slow decreased in the LME warehouse stock
from august 2012 to today, from 460,000t down to 370,000t.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
27
Figure 9: Inventories in Nickel and Copper at the London Stock
Exchange (LME) since May 2012.
For the long term, some brokers expect the nickel demand to grow
by 2% to 3% per year on average, which is faster than the growth in
supply. New market: The emerging batterie market for renewable
energy is a new market for nickel. The willingness to migrate from
fossil energy to electric energy is an irreversible trend. The new
market for batteries for automobiles, trucks, trains and ships, not
to mention the residential and industrial energy storages, is
underway and is going to increase exponentially in the next few
years. The nickel market will benefit greatly as the main
components of any given batteries are graphite and nickel.
NATURAL GRAPHITE FLAKE PROJECTED MARKET SIZE Highlights: Growth
Expectation in Electric Vehicles (EV) in China can change all
predictions; Spherical Graphite is currently the biggest growing
industry demand; Not all graphite is the same; India is a large
growing market for graphite flakes: in infrastructure development
but also for EV and Stationary
applications; The day India will “wake-up”, the need for natural
graphite flakes will go ballistic in all possible markets.
The world graphite market is dominated by a few long-established
mature players and uses requiring large volumes, but with several
specialist applications requiring lower volumes. More recently, a
new game changer come along in the energy industry – Li-ion
batteries – which could potentially require a great deal of
graphite in the future. In 2015, the global graphite market
(synthetic and natural) was approximately 2.7Mt per year and was
worth approximately US$14B.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
28
According to Persistence Market Research, the graphite market
has bifurcated on the basis of form (natural graphite and synthetic
graphite). Synthetic graphite is further sub-segmented on the basis
of form (graphite electrode, carbon fiber, graphite blocks,
graphite powder, and others). The graphite market is also segmented
on the basis of end-uses (electrode, refractory, lubricant,
foundry, battery, and others). All the segments provide market size
and forecast by volume and by value. The synthetic graphite segment
held the largest share of USD 12.49 billion in the graphite market
in 2013 and is expected to reach USD 16.06 billion by 2020 at a
CAGR of 3.7% from 2014 to 2020. In terms of volume, the global
graphite market grew from 2.19 million tons in 2010 to 2.68 million
tons in 2013 at a CAGR of 7.1%. Graphite Consumption by Industry
2016 (source: Roskill March 2017)
According to Roskill 2016, the Lithium-ion batteries will grow
to account for 9% of total graphite demand by 2026 as traditional
markets remain slow. The global demand for graphite has been
increasing steadily since the start of the new millennium and from
2000 to 2010 international consumption has doubled. Graphite is
considered a key, strategic material in the emerging green
technology economy, which includes advances in energy storage,
electric vehicles, photovoltaics and electronics from smartphones
to laptops. In 2012-13, China produced 73% of the world global
natural flake graphite production, mainly used for internal market.
China contribution to the world natural flake graphite production
has been reduced to 67% in 2015 with several additional mines
closure in 2016 due to raising local production costs and failure
to meet environmental new regulations. Currently, the USA, Canada,
Japan, Korea, Taiwan and Europe are seeking alternative sources to
China. This situation provides the opportunity to develop new mines
presenting attractive alternatives to existing supply. Analysts
Reports
A recent report from P&S Market Research estimates that from
2015 to 2020, the graphite market will grow at a compound annual
growth rate of 4%. The global graphite market was valued at
US$15.06B in 2015.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
29
Current Market
The market for natural graphite is expected to grow between 3%
and 9% between 2015 and 2020. If you consider that there is more
graphite in a lithium ion battery than lithium, the cost of
graphite to a battery could be as, if not more, significant than
lithium. It just has not been considered because the price of flake
graphite feedstock is low and there is a synthetic substitute.
According to an independent research company (Benchmark Mineral
Intelligence), Tesla’s Gigafactory 1 is expected to require over
42,000 tons of graphite anode material every year at a 35GWh
capacity of new cell production. In early 2017, Tesla CEO, Elon
Musk spoke of three new potential Gigafactories for post-2020
production, which would have a major impact on the raw materials,
such as graphite, necessary to fuel these plants. The market growth
for graphite comes from lithium-ion batteries. Batteries represent
the most significant demand driver for battery-grade (coated
spherical or ‘CSPG’) graphite. There are two types of CSPG graphite
used in Li-ion batteries — synthetic and natural. Due to cost and
performance efficiencies, many battery manufacturers are
transitioning to natural graphite. Within the lithium-ion battery
market itself, there are three main market segments.
1. Transportation Batteries: to power electric vehicles; the
electrification of automotive is evolving rapidly from niche to
mainstream (significant forecasted growth)
2. Stationary Storage Batteries: energy storage for electrical
grid, commercial and residential buildings; also,
referred to grid-storage batteries (exponential forecasted
growth)
3. Consumer Electronics Batteries: smartphones, laptops,
tablets, wearable electronics, power tools, and other
battery-powered devices (moderate forecasted growth)
-
SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
30
Transportation Batteries All Applications in Energy Capacity by
Region and Global Revenue (2013-2020)
Overall, battery sales into the transportation sector will grow
from 18.5 GWh in 2015 to 40.3 GWh in 2020. Revenue will grow from
USD$5.7 billion to USD$9.2 billion, representing a CAGR of 9.8%
(source: Cairn Energy Research Advisors, 2015) Stationary Batteries
All Applications in Energy Capacity by Region and Global Revenue
(2013-2020)
Stationary storage battery sales will grow from 671 MWh in 2013
to 8.2 GWh in 2020. The 2015 to 2020 forecasted CAGR is 51.1%.
Revenue will grow from USD$2.3 billion in 2013 to USD$4.8 billion
in 2020. The forecasted CAGR for revenue growth between 2015 and
2020 is 12.4% (source: Cairn Energy Research Advisors, 2015)
-
SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
31
All Battery Market Segments Global Battery Forecast —
Transportation, Stationary and Consumer Electronic Segments
Combined (2013-2020)
The global battery market will nearly double in size from 47.7
GWh in 2013 to 96.6 GWh in 2020, representing a 5-year CAGR of 8.7%
for the next 5 years (source: Cairn Energy Research Advisors, 2015)
Panasonic’s Forecast for Lithium-ion Battery Growth
(source: Benchmark Mineral Intelligence/Panasonic Corporation,
2015) * source: Industrial Minerals (October 2015) ** source:
Benchmark Mineral Intelligence (September 2015)
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
32
SELECTED FINANCIAL INFORMATION
Going concern assumption and liquidity risk
These interim condensed consolidated financial statements have
been prepared on a going concern basis, which presumes the Company
will continue its operations for the foreseeable future and will be
able to realize its assets and discharge its liabilities and
commitments in the ordinary course of business for the foreseeable
future. The use of these principles may not be appropriate. The
Company is in its early stages, and as is common with similar
companies, it raises financing for its exploration and evaluation
activities. The Company has incurred a net loss and comprehensive
loss for the nine-month period ended September 30, 2017 of
$2,694,458 (for the year ended December 31, 2016 – $905,792) and
has an accumulated deficit of $10,428,469 (December 31, 2016 –
$9,848,691). In addition, the Company had working capital of
$4,145,523 as at September 30, 2017 (December 31, 2016 –
$2,058,424), including cash and cash equivalents of $4,083,064
(December 31, 2016 – $2,579,417). To date, the Company has financed
its cash requirements primarily by issuing common shares or units.
The Company’s ability to continue as a going concern is subject to
its ability to raise additional financing or reduce its expenditure
levels. The Company’s discretionary activities do have some scope
for flexibility in terms of the amount and timing of expenditures,
and to a certain extent, expenditures may be adjusted accordingly.
Based on the extent of the Company’s current development plan and
anticipated exploration, the Company will need to raise additional
financing within the next 6-12 months, and those facts cast
significant doubt on the Company’s ability to continue as a going
concern. While Management has been successful in securing financing
in the past, there can be no assurance it will be able to do so in
the future, that such sources of funding will be available to the
Company or that they will be available on terms acceptable to the
Company.
If Management is unable to obtain new funding, the Company may
be unable to continue its operations, and amounts realized for
assets might be less than amounts reflected in these consolidated
financial statements. In addition, the Company is subject to Côte
d'Ivoire permit and license renewals, and will depend on outside
parties and governmental authorities for continued exploration of
its properties.
These interim condensed consolidated financial statements do not
include any adjustments to the amounts and classification of assets
and liabilities that may be necessary if the Company is unable to
continue as a going concern. Such adjustments could be
material.
Reverse Takeover transaction
Pursuant to the terms and conditions of a Share Exchange
Agreement, signed on August 5, 2016, between Sama and Section Rouge
Media Inc. (“SRM”), SRM acquired on December 31, 2016, 100% of the
issued and outstanding shares of Sama Resources Guinee SARL ("Sama
Guinee"), a wholly-owned subsidiary of Sama in exchange of
24,658,267 common shares of SRM at a deemed price of $0.10 per
share. This transaction resulted in a Reverse Takeover (the
"Reverse Takeover” or the “Transaction”) of SRM by Sama’s
subsidiary Sama Guinee, resulting in Sama acquiring 49.16% of SRM's
outstanding common shares. Following the completion of the Reverse
Takeover, SRM changed its name to Sama Graphite Inc ("SRG"). On
September 30, 2017, Sama Graphite Inc. changed its name to SRG
Graphite Inc.
As a result of the Transaction, Sama's 100% ownership in Sama
Guinee was exchanged for a 49.16% ownership interest in SRG. Even
considering the fact that Sama doesn't own the majority of the
common shares issued and outstanding of SRG, Sama determined that
they still control SRG as the remaining shares of SRG are
relatively widely held. Since the Transaction doesn't result in a
change of control over Sama Guinee, Sama continues to consolidate
the financial results of Sama Guinee in its consolidated financial
statements and consolidated SRG's other activities since the
acquisition date.
Financial Position Analysis September 30,
2017 December 31,
2016 December 31,
2015 $ $ $
Total assets 26,992,763 22,881,318 20,275,455 Total liabilities
225,140 614,765 253,858 Total equity 26,767,623 22,266,553
20,021,597 Working capital* 4,145,523 2,058,424 338,947
*Working capital is a measure of current assets less current
liabilities.
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
33
Assets Total assets at September 30, 2017 were $26,992,763
compared to $22,881,318 at December 31, 2016, an increase of
$4,111,445 mainly due to an increase in cash and cash equivalents
of $1,503,647, prepaid expenses and deposits of $182,875,
exploration and evaluation assets of $2,249,524 and property and
equipment of $164,447. The increase in cash and cash equivalents is
mainly due to the completion of private placements by Sama and SRG
for total proceeds of $5,610,407 which served to fund the
operations activities of $1,713,275 and investing activities of
$2,393,485. Readers are invited to refer to the cash flows analysis
for more detail on these uses of funds. The increase in prepaid
expenses and deposits is mainly related to a payment of $24,000
made in advance on an investor relation agreement, to a deposit of
$47,907 to undertake a Preliminary Economic Assessment on the Lola
Graphite property and to a total payment of $106,206 for the
acquisition of two vehicles in Guinea pending delivery.
Liabilities
Total liabilities at September 30, 2017 were $225,140 compared
to $614,765 at December 31, 2016, a decrease of $389,625 which is
directly related to a decrease in accounts payables and accrued
liabilities. At December 31, 2016, accounts payables and accrued
liabilities were greater because of the Reverse Takeover
transaction.
Equity At September 30, 2017, the Company had an equity of
$26,767,623 compared to $22,266,553 at December 31, 2016, an
increase of $4,501,070 mainly due to the completion of private
placements by Sama and SRG for total net proceeds of $5,610,407 and
to the recognition of a stock-based compensation of $1,585,121. The
stock-based compensation is due to options granted in both Sama and
SRG and to the recognition of an adjustment following the expiry
date extension of stock options previously granted to officers and
directors in Sama. However, these increases were offset by the
period net loss of $2,694,458.
Operating Results analysis
Readers are invited to take into consideration that the results
herein presented for the three-month and nine-month periods ended
September 30, 2017 represent the consolidated results of Sama Group
including the results of SRG Group acquired as part of the Reverse
Takeover transaction completed on December 31, 2016, which results
are being compared to past financial results of Sama Group
only.
Three-month period ended
September 30, 2017
Three-month period ended
September 30, 2016
Nine-month period ended
September 30, 2017
Nine-month period ended
September 30, 2016
$ $ $ $ Revenues - 2,350 - 73,816 Operating expenses (640,453)
(278,194) (2,604,207) (738,433) Net loss (693,172) (268,641)
(2,694,458) (740,575) Net loss per share (0.003) (0.002) (0.021)
(0.007)
THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2017 COMPARED TO THE
THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2016
For the three-month period ended September 30, 2017, the Company
recorded a net loss of $693,172 or $0.003 per share compared to
$268,641 or $0.002 per share for the same period in 2016, an
increase of $424,531 which is due to the following important
variations:
Operating expenses Operating expenses went from $278,194 in 2016
to $640,453 in 2017, an increase of $362,259 mainly due to an
increase in the stock-based compensation ($307,640) and consulting
fees ($52,130). The increase in stock-based compensation is related
to options granted in both Sama and SRG. The increase in consulting
fees is related to agreements signed in both Sama Group and SRG
Group for business development. However, these increases were
offset by a decrease in office administration of $38,078 due to the
layoff of two employees in October 1, 2016.
-
SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
34
Other expenses (income)
For the three-month period ended September 30, 2017, the Company
recorded other expenses of $52,719 compared to other revenues of
$33,769 in 2016. The other expenses in 2017 are related to a
foreign exchange loss while other revenues in 2016 are related to a
gain on disposal of property and equipment of $40,614. Foreign
exchange loss (gain) is related to the fluctuations of the foreign
currencies compared to the Canadian dollar.
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2017 COMPARED TO THE
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2016
For the nine-month period ended September 30, 2017, the Company
recorded a net loss of $2,694,458 or $0.021 per share compared to
$740,575 or $0.007 per share for the same period in 2016, an
increase of $1,953,883 which is due to the following important
variations:
Revenues The Company had revenues of $73,816 in 2016 compare to
$nil in 2017. These revenues were related to contracts for
bulldozing and other drilling preparation services.
Operating expenses Operating expenses went from $738,433 in 2016
to $2,604,207 in 2017, an increase of $1,865,774. This increase is
mainly due to an increase in the stock-based compensation
($1,464,785), consulting fees ($177,384), investor relation fees
($74,967), travel and representation fees ($110,022), office
supplies, utilities and rent ($41,570) and transfer agent and
filing fees ($31,456). The increase in stock-based compensation is
related to options granted in both Sama and SRG and to the
recognition of an adjustment following the expiry date extension by
an additional 60 months of stock options previously granted to
officers and directors in Sama. The increase in consulting fees is
related to agreements signed in both Sama Group and SRG Group for
business development. The investor relation increase is directly
attributable to agreements signed by SRG. The increase in travel
and representation fees is due to an increase in the number of
trips to Africa. The increases in office supplies, utilities and
rent and transfer agent and filing fees are directly attributable
to the consolidation of SRG Group’s operations starting December
31, 2016.
Other expenses (income)
For the nine-month period ended September 30, 2017, the Company
recorded other expenses of $90,251 compared to other revenues of
$18,397 in 2016. The other expenses in 2017 are related to a
foreign exchange loss while other revenues in 2016 are related to a
foreign exchange gain of $12,114 and to a gain on disposal of
property and equipment of $6,155. Foreign exchange loss (gain) is
related to the fluctuations of the foreign currencies compared to
the Canadian dollar.
Cash Flows analysis Readers are invited to take into
consideration that the cash flows herein presented for the
three-month and nine-month periods ended September 30, 2017
represent the consolidated cash flows of Sama Group and SRG Group
following the Reverse Takeover transaction completed on December
31, 2016, which cash flows are being compared to Sama Group cash
flows only.
Three-month period ended
September 30, 2017
Three-month period ended
September 30, 2016
Nine-month period ended
September 30, 2017
Nine-month period ended
September 30, 2016
$ $ $ $ Cash required by operating activities (405,115)
(256,063) (1,713,275) (530,727) Cash required by investing
activities (643,059) (8,152) (2,393,485) (298,932) Cash generated
by financing activities 2,984,438 381,946 5,610,407 636,270
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SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
35
THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2017 COMPARED TO THE
THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2016
Operating Activities For the three-month period ended September
30, 2017, operating activities required cash flows of $405,115
compared to $256,063 for the same period in 2016, an increase of
$149,052. This increase in the use of cash flows is due in part to
the net loss increase after adjustment for items not affecting cash
which went from $275,594 in 2016 to $352,083 in 2017. In addition,
change in non-cash working capital items required cash flows of
$53,032 in 2017 compared to generated cash flows of $19,531 for the
same period in 2016. In 2017, the required cash flows were mainly
related to prepaids expenses and deposits which were offset by the
taxes receivable and accounts payable and accrued liabilities.
Investing Activities
For the three-month period ended September 30, 2017, investing
activities required cash flows of $643,059 compared to $8,152 for
the same period in 2016, an increase of $634,907 due to exploration
and evaluation expenditures which required cash flows of $633,792
in 2017 compared to $214,167 in 2016. However, in 2016, these
outflows were offset by the disposal of property and equipment for
total proceeds of $206,015.
Financing Activities For the three-month period ended September
30, 2017, financing activities generated cash flows of $2,984,438
compared to $381,946 for the same period in 2016, an increase of
$2,602,492 which is mainly due to the completion of a private
placement by SRG for total net proceeds of $2,984,438 in 2017
compared to a private placement of $390,000 completed by Sama for
the same period in 2016.
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2017 COMPARED TO THE
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2016 Operating Activities For
the nine-month period ended September 30, 2017, operating
activities required cash flows of $1,713,275 compared to $530,727
for the same period in 2016, an increase of $1,182,548. This
increase in the use of cash flows is due in part to the net loss
increase after adjustment for items not affecting cash which went
from $621,857 in 2016 to $1,105,725 in 2017. In addition, change in
non-cash working capital items required cash flows of $607,550 in
2017 compared to generated cash flows of $91,130 for the same
period in 2016. The required cash flows were mainly related to
prepaids expenses and deposits and accounts payable and accrued
liabilities.
Investing Activities
For the nine-month period ended September 30, 2017, investing
activities required cash flows of $2,393,485 compared to $298,932
for the same period in 2016, an increase of $2,094,553 due to
exploration and evaluation expenditures which required cash flows
of $2,158,158 in 2017 compared to $523,356 in 2016. In addition,
property and equipment acquisition required cash flows of $235,327
in 2017 compared to $2,218 for the same period in 2016. However, in
2016, these outflows were offset by the disposal of property and
equipment for total proceeds of $226,642.
Financing Activities For the nine-month period ended September
30, 2017, financing activities generated cash flows of $5,610,407
compared to $636,270 for the same period in 2016, an increase of
$4,974,137 due to the completion of private placements by Sama and
SRG for total net proceeds of $5,610,407 in 2017 compared to the
completion of a private placement in Sama for total net proceeds of
$636,270 for the same period in 2016.
-
SAMA RESOURCES INC. Management’s discussion and analysis for the
third quarter ended September 30, 2017
36
Quarterly Results Trends
The operating results for each of the last eight quarters are
presented in the following table. Readers are invited to take into
consideration that the quarters presented after December 31, 2016
represent the consolidated results of Sama Group including the
results of SRG Group acquired as part of the Reverse Takeover
completed on December 31, 2016, while those before December 31,
2016 includes Sama Group results only.
Sept 30, 2017
June 30, 2017
March 31, 2017
Dec 31, 2016
Sept 30, 2016
Jun 30, 2016
Mar 31, 2016
Dec 31, 2015
$ $ $ $ $ $ $ $ Revenues - - - 13,820 2,350 25,595 45,871
30,421
Net loss (693,172) (1,188,484) (812,802) (165,217) (268,641)
(247,385) (224,549) (256,908) Net loss per share 0.003 0.011 0.007
0.001 0.002 0.004 0.002 0.002
TRANSACTIONS WITH RELATED PARTIES
Transactions with key management personnel During the nine-month
period ended September 30, 2017, the Company incurred accounting
fees of $81,400 (for the nine-month period ended September 30, 2016
– $64,582) with the CFO. These fees are recorded under professional
fees. During the nine-month period ended September 30, 2017, the
Company incurred legal fees of $13,500 (for the nine-month period
ended September 30, 2016 – $nil) with an officer. These fees are
recorded under professional fees. During the nine-month period
ended September 30, 2017, the Company paid a salary of $20,250 (for
the nine-month period ended September 30, 2016 – $21,375) to an
officer. These fees are recorded under office administration.
During the nine-month period ended September 30, 2017, the Company
incurred consulting fees of $138,753 (for the nine-month period
ended September 30, 2016 – $169,588) with a corporation controlled
by a director who is also the President and Chief Executive
Officer. An amount of $12,334 (for the nine-month period ended
September 30, 2016 – $36,017) has been recorded under consulting
fees and $111,004 (for the nine-month period ended September 30,
2016 – $133,569) has been capitalized to the Company’s exploration
and evaluation assets. During the nine-month period ended September
30, 2017, Sama recognized a stock-based compensation of $82,302
(for the nine-month period ended September 30, 2016 – $86,309) in
connection with stock options granted to officers and directors and
$201,729 in connection with the expiry date extension of stock
options previously granted to officers and directors. During the
nine-month period ended September 30, 2017, SRG recognized a
stock-based compensation of $463,953 (for the nine-month period
ended September 30, 2016 – nil) in connection with stock options
granted to officers and directors. As at December 31, 2016, an
amount of $188,665 was due to corporations controlled by a director
or officer. These amounts are included in accounts payable and
accrued liabilities. As part of Sama’s private financing completed
in April 2017, officers and directors of Sama purchased a total of
1,859,997 units at a price of $0.15 per unit for total proceeds of
$279,000. Transactions with related parties: During the nine-month
period ended September 30, 2017, t